Charlie Lee Proposes Merged Mining of Litecoin and Dogecoin

The surprising success of dogecoin has changed the way that miners view the scrypt algorithm. And that's not good for litecoin or doge, according to Charlie Lee.

On the dogecoin subreddit, the litecoin creator has proposed merged mining of the coins in order to ensure better security:

"Litecoin's security is a lot less than it could be. So merging mining with dogecoin would make both litecoin/dogecoin almost impossible to 51%."

What does '51%' mean?

When Lee refers to this 51%, he's talking about a '51% attack', an exploit that could be made possible if a miner or a pool could take control of over half of a cryptocurrency's network power.

Bitcoin Foundation Chief Scientist Gavin Andresen has a brief post on his blog outlining what such an attack entails.

Essentially, it means that block transactions could end up being controlled without the consensus users expect from these networks today.

Litecoin's hashing power over the past three months. Source: Liteshack

Mining is an important distributed method for confirming transactions, but it ultimately costs money to do so in equipment, electricity and time.

So, the reality is that scrypt miners point their mining rigs to the coin that they think has the highest potential for profit.

As miners have become interested in dogecoin at the expense of litecoin, this has meant that there is less hashing power growth in LTC. However, at 174,000 total MH/s for LTC versus 71,000MH/s for doge, litecoin is still a much more powerful network.

Merged mining

In the past, dogecoin had been retargeting only every four hours. This meant opportunistic miners could move to other scrypt-based coins and cause difficulty to be misrepresented as a test of that network's hashing power.

In order to prevent this, the difficulty retargeting now happens during doge's block generation, which is roughly every minute. This has helped to better secure dogecoin's hashing power and made it less volatile.

Dogecoin's hashing power over the past three months. Source: Liteshack

The idea of merged mining two independently successful coins is a colorful concept.

"Merge mining only affects mining and nothing else," Lee says in his post. In addition, he tries to allay the fears that litecoin and dogecoin could become tangled with one another rather confusingly – a problem that could affect the technical and mainstream communities around both.

Says Lee:

"[It] doesn't merge the blockchains, the clients, economics of the coins, the dev team, or the communities. All it does is make it so that you mine both coins at the same time, and secure both coins at the same time."

Hard fork

Lee's idea is to 'hard fork' dogecoin in order to allow for merged mining.

At least one of the coins would need to do so for the idea to work. And the ideal coin to fork is dogecoin, according to Lee:

"This [merged mining] can be accomplished by a hard fork in either coin. You've likely seen my take on why hard forking litecoin is too dangerous today. Not so for dogecoin."

Dogecoin was hard forked in March, as users were required to update to the 1.6 version of the client that added features such as a four-hour maturing period for mined coins.

Jackson Palmer, one of the co-founders of dogecoin, believes that litecoin's size could make a fork quite difficult:

"As for the fork, they have a larger market cap and hash rate, and are hence more scared about getting 51% of their users to update to a new version."

It is fundamentally a transactional currency for tipping on reddit, something Palmer ideally wants to continue focusing on:

"Essentially, I don’t think merged mining is the answer for dogecoin right now. It’s less than five months old and to say that anything needs to be done right now comes down to pure speculation."

Would merged mining help to maintain both litecoin and dogecoin? Probably, but the two currencies are in such different stages that it might be better to let each thrive in its own way.

Added Palmer:

"Brashly changing [proof-of-work] algorithms, merged mining and all other solutions I’ve been presented with are simply band-aids to the fact that a currency requires active use and demand to succeed."